Yesterday, Reddit’s admin Yishan announced that they plan to create a cryptocurrency. Reddit raised $50 million in funding, and plans to share 10% with the userbase somehow, calling for the possible need for a cryptocurrency. The plan is in its infancy, but Andrew Barisser of Assembly Coins wrote an open letter to Reddit.
He makes a strong argument for Reddit building on top of the Bitcoin blockchain, rather than creating another altcoin.
“From a technical point of view, however, Reddit stands at a crossroads with many different paths. How to implement their vision so that it is convenient for users, as well as secure and powerful, is a demanding decision that must be made and never changed. It is crucial to get this choice right on the first try. Whichever approach is chosen, it will be vested by the faith of users in Reddit to uphold its obligations. Drastic technical changes down the road could be disastrous in upholding that trust.”
“I fear that Reddit is intimating the launch of its own crypto currency altogether, on its own, separate blockchain. In other words, Reddit would become just another altcoin, orthogonal to every other coin as DogeCoin is to LiteCoin. I believe that this would be a serious misstep.”
New altcoins emerge all the time, and the cryptocurrency community is burnt out due to scams and an oversaturated market. To combat this, Counterparty adopted a “Bitcoin 2.0” approach by building on top of the Bitcoin blockchain, integrating with Bitcoin and securing the network further. Other coins follow this route as well, and that’s what Barisser argues is the best for Reddit’s cryptocurrency.
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What Are Reddit’s Plans?
Yesterday Reddit hired Bitpay’s Ryan Charles as cryptocurrency engineer. There’s a lot of time for planning, but one common problem of cryptocurrencies is the lack of infrastructure, for which the community is expected to make up. That worked with Bitcoin and Litecoin, but other cryptocurrencies are in a constant struggle to stay afloat due to a variety of threats.
“For altcoins, the threat of a 51% attack is very real,” Barisser wrote in his letter. “Many altcoins have been overpowered by such attacks. Their very obscurity in mining makes them vulnerable. The only thing protecting most altcoins is their utter lack of financial value.”
With Reddit hiring Charles, there’s an opportunity to keep their cryptocurrency tied directly to Bitcoin through a 2.0 platform. Barisser proposes to implement Reddit coins as Colored Coins. As he points out, Assembly Coins even built an open source API and protocol for using Colored Coins.
“Representing ownership as a token is only the first step. Reddit can gain from these innovations. Perhaps users can hold Reddit Shares and write cryptographically signed “Reddit Platinum” messages with them. Maybe subreddits hold money collectively on multisig addresses. Who knows? The possibilities are endless. But let’s start with a sound foundation. Our system works.”
Why Barisser’s Proposal Makes Sense
If Reddit created their altcoin, it would probably do quite well at first. There would be a lot of excitement and people would learn a lot about cryptocurrency in the process. But, like with most altcoins, there would be a struggle to gain traction and keep it during the lifecycle.
Barisser’s head is on his shoulders, and his is exactly the kind of proposal that Reddit needs to be looking at if they decide to move forward. It deserves to be echoed.
Images from Assembly Coin, Reddit and Shutterstock.